Notice on the Relevant Policies of the Pre-tax Carry-over Deduction of Enterprise Income Tax for Public Welfare Donations
Finance and Taxation  No.15
To the Department of Finance (Bureau), State Taxation Bureau and Local Taxation Bureau of all provinces, autonomous regions, municipalities directly under the Central Government and cities with separate state planning, and Bureau of Finance of Xinjiang Production and Construction Corps:
In accordance with the relevant provisions of theEnterprise Income TaxLaw of the People's Republic of China and Regulations for the Implementation of the Enterprise Income Tax Law of the People's Republic of China, the relevant policies on the pre-tax carry-over deduction of enterprise income tax on public welfare donation expenditure is hereby notified as follows:
1. The donation expenditure of enterprises for charitable activities and public welfare undertakings through public welfare social organizations or the governments at or above the county level (including the county level) and their constituent departments and directly affiliated institutions shall be allowed to deduct the part within 12% of the total annual profit when calculating the taxable income; the part exceeding 12% of the total annual profit shall be allowed to be deducted when calculating the taxable income within three years after the carry-over.
The public welfare social organizations mentioned in this article shall legally obtain the qualification for pre-tax deduction of public welfare donation.
The term “total annual profit” mentioned in this article refers to the amount greater than zero calculated by an enterprise in accordance with the provisions of the unified state accounting system.
2. The part of the public welfare donation expenditure incurred by an enterprise in the current year and carried forward from previous years, allowed to be deducted before tax in the current year, shall not exceed 12% of the total annual profit of the enterprise in the current year.
3. The part of the public welfare donation expenditure incurred by an enterprise that has not been deducted before tax in the current year is allowed to be carried forward for deduction in the following years, but the carry-over period shall not exceed three years from the second year of the donation year.
4. When calculating the deduction of public welfare donation expenditure, the enterprise should first deduct the donation expenditure carried forward from previous years, and then deduct the donation expenditure incurred in the current year.
5. This notice shall be implemented from January 1, 2017. The part of the public welfare donation expenditure that incurred from September 1, 2016 to December 31, 2016 and has not been deducted before tax in 2016, can be implemented in accordance with this notice.
The Ministry of Finance and the State Administration of Taxation
February 11, 2018